Nicolas Sarkozy, the President of France, is derailing his own worthwhile initiative by demagogic talk about speculators. He has proposed food security and commodity prices as a major theme of the current French chairmanship of the G20. But at the African Union's summit in Addis Ababa at the end of last month, he simply attributed rising food prices to a "veritable scandal," to financial speculation and "pillaging."
The revolutionary events in Egypt make this matter especially topical. When Russia and neighbouring countries had poor harvests, and Russia then and Ukraine established restrictions on grain exports, it was foreseeable and actually foreseen that Egypt, the world's largest wheat importer, would particularly suffer.
Genuine supply problems and government policies - not only export bans but importers' price subsidies, as in Egypt - sufficiently explain the price increases. Indeed, a European Union study - which may have been toned down under French government influence - could not find factual grounding for a significant correlation between food commodity traders' positions and food futures prices. There is no evidence that wicked speculators are to blame.
None of this takes away from the good aspects of Mr. Sarkozy's initiative. France is proposing rules to regulate export restrictions, which are not effectively controlled by the postwar GATT treaty, which is still the core of the World Trade Organization. Moreover, there should be an international effort to gather data on food stocks, about which very little is known, when compared, for example, with petroleum - the price movements of which have been very similar to those of foodstuffs in the past decade. Not only national governments but also the Food and Agriculture Organization should take part.
It is hard not to suspect that Mr. Sarkozy was currying favour with some members of the AU, in North Africa and beyond. But there are still several months in the French G20 chairmanship, in which the President can work for constructive ideas of greater information and less protectionism in food markets.
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